Pillar Data Systems

Oracle Corp. (Nasdaq: ORCL) CEO Larry Ellison has personally invested a huge chunk of cash -- to the tune of at least $100 million -- in Pillar Data Systems, a stealth-mode startup developing a next-generation NAS storage system.

Pillar Data's sole investor is Lawrence Investments LLC, Ellison's private equity investment firm that specializes in technology and biotechnology industries. Besides a corpulent bankroll, Pillar Data has an experienced management team with IBM Corp. (NYSE: IBM) bloodlines.

It isn't clear precisely what Larry's storage startup is up to, as it is still nine months to a year away from delivering a product. But that's not to say it doesn't have grand (grandiose?) visions: Michael Workman, Pillar Data's president and CEO, isn't shy about saying that the long-term goal is for the company to become a "Fortune 500 storage company." In other words, Pillar Data wants to be the next EMC Corp. (NYSE: EMC) or Network Appliance Inc. (Nasdaq: NTAP) when it grows up.

"We're not a technology play where we're trying to sell ourselves to somebody in 12 to 18 months," he says.

Workman says the company is developing an integrated hardware and software system that provides both NAS and SAN functions, and will scale from 1 Tbyte to "hundreds of terabytes." About 80 percent of the company's efforts are centered on software, he says. What's the difference between Pillar Data and the scads of others in this market? The system, Workman promises, will be "cost-effective at acquisition and extremely cost-effective vis--vis administration and management."Some other clues to what Pillar Data is cooking up can be found in the job listings section on its Website. The startup is looking for engineers to develop "SAN Command and Control Module" software; block protocol developers for its "SAN target device"; engineers to design and test "Pillar Data's file system"; and a senior engineer to "design and implement key portions of the Inter-Process and Inter-Node messaging and Data Movement functions as well as the software that drives the InfiniBand hardware." [Ed. note: That's a pretty hefty load of technologies to be cramming into one package, no?]

Pillar Data won't divulge details of the technologies it's using in its system, nor will it discuss partners it is working with. "If I tell you we're using Serial ATA, then we'll become known as, 'Hey, you're the Serial ATA guys,' " Workman says. However, he will say that the system is not based on InfiniBand anymore, an adjustment Pillar Data made relatively quickly: "It took us just three weeks to switch from InfiniBand to our current fabric." He declined to say what the current fabric was.

The company started life as Digital Appliance Corp., an Ellison-backed storage "think tank" with engineering operations in Israel. It changed its name to Pillar Data in August 2001, and the company shut down its lab in Israel in October 2002. "The skill talent pool over there vis-à-vis what we're developing was not the best," Workman says. "So we decided to move all our operations to the U.S." [Ed. note: Vis-à-vis Workman's comments, clearly he's fond of a certain expression française.]

Currently, Pillar Data has 175 employees, of which around 130 are engineers. The company is based in Milpitas, Calif., and has offices in San Jose, Calif., and Longmont, Colo.

Steve Duplessie, senior analyst at The Enterprise Storage Group Inc., says Pillar Data is the result of Ellison's plan to build a high-powered server for hosting Oracle software. "Originally, Larry wanted them to become the megaserver during his 'thin client' days," he says. "What he needed was a server that could scale infinitely but always be seen as a 'single' system."Pillar Data, he says, is now in the "next-generation NAS" category: Its system provides a single NAS image that scales "from here to Timbuktu in every dimension -- capacity, bandwidth, and I/O -- automatically as you add 'bricks,' " says Duplessie. "Très cool."

Maybe. But Pillar Data certainly isn't alone in trying to build a supposedly infinite storage architecture. And it's worth noting that other next-generation NAS storage startups, for the most part, haven't proven themselves viable contenders. Companies in this space include BlueArc Corp., ClariStor Inc. (formerly Agile Storage), Isilon Systems, LeftHand Networks, Panasas Inc., Spinnaker Networks Inc., and Zambeel Inc. -- in all, a group that has had its share of stumbles (see Agile Plods Ahead, Spinnaker Shoves Off, 30 Zambeelians Get Pink Slips, and Panasas Pipes in $28M).

Meanwhile, the track record of high-scale SAN storage startups is even less encouraging. These would-be competitors to EMC's Symmetrix and Hitachi Data Systems (HDS)'s Lightning include 3PARdata Inc., the defunct Cereva Networks, and the still-in-limbo YottaYotta Inc. (see 3PAR Swings Club, YottaYotta Still in the Game?, and Cereva Sells Out to EMC).

As one industry observer asks rhetorically: "Does the world need or want another HDS, EMC, NetApp competitor?"

Another source, who is familiar with the company, says Pillar Data's notion of the current market prices for NAS and SAN storage arrays diverges drastically from reality. "They have a large number of IBMers and they have a large checking account compliments of Larry -- neither of which are necessarily formulas for success," the executive says.ESG's Duplessie acknowledges that Pillar Data does not have a unique strategy. "They are no longer the only guys thinking about this, but they're smart -- and they do have Uncle Larry behind them," he says.

Workman says the company is being cautious and deliberate in how it approaches the market. For example, he says, Pillar Data took nine months to develop its market-requirements document before the engineers wrote a single line of code. "We realize time-to-market is important, but getting it right and delivering on the value proposition is better," he says. Plus, "we have a really good opportunity to see where people will stumble."

Each of the company's senior managers has IBM family ties. Workman was formerly VP of worldwide development for IBM's storage technology division and was also VP of OEM storage subsystems at Big Blue. In addition, he was CTO of Conner Peripherals, a hard-drive maker acquired by Seagate Technology Inc. in 1996. According to Pillar Data, Workman holds over fifteen technology patents and has a Ph.D. in electrical engineering from Stanford University. (He also has a dachshund named Waffles -- whose "real" name, we're told, is "Clams" [ed. note: some kind of inside joke, we suspect] -- Pillar Data's official mascot.)

Pillar Data's other executives include COO Nancy Holleran, who also hails from Conner Peripherals and IBM, where she served in various management roles. Mark D'Apice, senior VP of research and development, was previously VP of development for IBM's OEM storage and subsystems group, worked at Mylex Corp. (acquired by LSI Logic Corp. [NYSE: LSI]), and was a founder of CyberStorage Systems (Storage Computer Corp. [AMEX: SOS]). Finally, Ronald von Trapp, senior VP of sales and marketing, was most recently VP of sales at Gadzoox Networks Inc. (OTC: ZOOX). Von Trapp previously held sales positions at companies including IBM, Quantum Corp. (NYSE: DSS), Maxtor Corp. (NYSE: MXO), Mylex, and Vixel Corp. (Nasdaq: VIXL).

The startup's board of directors includes Ellison, Workman, Steven Fink (the CEO of Lawrence Investments), and Philip Simon, who is a consultant for Lawrence Investments and acts as Pillar Data's "titular CFO," Workman says.Lawrence Investments, Workman notes, is not associated with Oracle at all -- so it's not as if Pillar Data is creating some kind of super-charged Oracle database platform. "It's Larry's personal investment," he says.

And having Larry Ellison as the company's single financial backer is a huge advantage, Workman claims [ed. note: though he would say that, wouldn't he?], since the company doesn't have to deal with fire-breathing VCs. "We're not at the confluence of pressure from investors and the need to sell something. It's a tough time even for the big guys to sell stuff," he says. "Larry is committed to building this company."

We'll check back in a few months, then, and see how well Pillar Data is holding up its end of the bargain -- and whether Ellison remains so steadfastly committed to the company.

— Todd Spangler, US Editor, Byte and Switch
http://www.byteandswitch.com